The Hong Kong dollar’s link to the US dollar

The Hong Kong dollar is a strange currency, although given how most governments (sorry, central banks) run their currencies perhaps it would be better if it was the norm.

Hong Kong does not have a central bank, although it does have a [Monetary Authority](http://www.hkma.gov.hk). Instead, notes of 20 Hong Kong dollars and above are issued by three banks: HSBC (The Hongkong and Shanghai Banking Corporation Limited), Standard Chartered, and these days Bank of China. For every 7.8 Hong Kong dollar issued, they must keep one American dollar in reserve. Simple, really.

The recent shenanigans with the US dollar, however, have led people to (again) consider whether this arrangement is in Hong Kong’s interest. The Economist covered this issue reasonably well in two articles: